Oil prices are always considered as the driver of commodity prices in any economy.

Especially in Pakistan where the major

portion of our imports is petroleum products, it is commonly assumed that prices of everyday goods are dependent on the
petroleum prices.

Crude oil prices have been cut in half in less than a year, reaching lows that people have not seen since the last global
recession. Prices have recovered periodically in 2015, but many oil executives believe it will be years before oil returns to
$100 per barrel. The cause of the downturn is the declining price of a barrel of oil mainly is the strong U.S. dollar. The dollar
was at a 12-year high against the euro, leading to appreciations in the U.S. dollar index and a reduction in oil prices. This
puts the market under a lot of pressure, because when the value of the dollar is strong, the value of commodities falls. Global
commodity prices are usually in dollars and fall when the U.S. dollar is strong. Another leading factor in the sharp price drop
of crude oil is that OPEC, a cartel of oil producers, is unwilling to stabilize the oil markets. Prices of OPEC’s benchmark
crude oil have fallen 50% since the organization decided against cutting production at a 2014 meeting in Vienna.

Crude futures declined in late September 2015 given that the global oversupply is increasing oil stockpiles. Unrelated to
futures, oil inventories have risen more than expected. At almost 500 million barrels, U.S. crude oil inventories are at the
highest level in at least the last 80 years, causing a decline in prices. While supply is increasing, demand for crude oil is
decreasing. The economies of Europe and developing countries are weakening, and at the same time, vehicles are becoming
more efficient, which has caused the demand for fuel to lag. China's devaluation of its currency suggests its economy may be
worse off than expected. With China being the world's largest oil importer, this is a huge hit to global demand.

Commodity Prices vs. Crude Prices

Karachi

As evident from data analysis and after plotting time series graph of crude oil vs. selected household items it is fairly
deducible that oil prices does not directly affect most of the households but cooking oil is observed to have direct relation
with crude oil process. It seems that the perception that increase in crude oil prices causes raise in the prices of household
items is not valid as only cooking oil is observed to have been directly affected by price variation of crude oil. This
rationalize that there are some other variables which have direct relationship with household price variation.
 0
20
40
60
80
120
100
0
20
40
60
80
100
120
Sep-12
Sep-12
Jan-13
Jan-13

0
20
40
60
80
100
160

120
140
May-13
May-13
Sep-13 Sep-12
Sep-13
Jan-14 Dec-12
Jan-14
May-14 Mar-13
May-14
Sep-14 Jun-13

Wheat
Sep-14
Jan-15

Wheat
Sep-13 Jan-15
May-15
Dec-13 May-15
Sep-15
Mar-14 Sep-15

Crude
Jan-16

Crude
Jun-14 Jan-16
May-16
Sep-14 May-16
Sep-16
Sep-16
Jan-17 Dec-14

Tomatoes
Jan-17
May-17 Mar-15
May-17
Sep-17 Jun-15
Sep-17
Sep-15

Crude
Dec-15

0
50
100
150
200
250
Mar-16
0
50
100
150
200
250

Sep-12
Jun-16 Sep-12
Jan-13
Sep-16 Jan-13
May-13
May-13
Sep-13 Dec-16
Sep-13
Jan-14 Mar-17
Jan-14
May-14 Jun-17
May-14
Sep-14 Sep-17
Sep-14
Jan-15
Jan-15

Chicken, Boiler, live

May-15
Chicken, Boiler, live

May-15
Sep-15
Sep-15
Jan-16
Jan-16
May-16

Crude
May-16
Sep-16
Crude

Sep-16
Jan-17
Jan-17
May-17
May-17
Sep-17
Sep-17
 0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
Sep-12 Sep-12
Mar-13 Jan-13
Sep-13 May-13
Mar-14 Sep-13
Sep-14 Jan-14

Tomatoes
Mar-15
May-14
Sep-15

0
20
40
100
120

60
80
Sep-14

Sugar
Mar-16 Sep-12 Jan-15

Crude
Sep-16 Nov-12
May-15
Mar-17 Jan-13
Mar-13 Sep-15

Crude
Sep-17
May-13 Jan-16
Jul-13 May-16
Sep-13
Sep-16
Nov-13
Jan-14 Jan-17

0
50
100
150
200
Mar-14 May-17
Sep-12
May-14 Sep-17
Jan-13
Jul-14
May-13
Sep-14
Sep-13
Nov-14
Jan-14
Wheat
Pakistan

Jan-15
May-14
Mar-15
Sep-14
May-15
Jan-15
Jul-15

Chicken, Boiler, live

May-15
Crude

Sep-15
Sep-15
Nov-15
Jan-16
Jan-16
May-16
Mar-16

Crude
Sep-16
May-16
Jan-17
Jul-16
May-17
Sep-16
Sep-17
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
 0
20
60
80
100
120
140
160
180

40

0
50
100
150
200
250
Sep-12
Sep-12
Dec-12
Dec-12
Mar-13
Mar-13
Jun-13
Jun-13
Sep-13
Sep-13
Dec-13
Dec-13
Mar-14
Mar-14
Jun-14
Jun-14
Sep-14
Sep-14

Sugar
Dec-14

Petrol
Dec-14
Mar-15
Mar-15

Industrial Crude Prices vs Petroleum Prices

Jun-15
Jun-15
Sep-15

Crude
Sep-15

Crude
Dec-15
Dec-15
Mar-16
Mar-16
Jun-16
Jun-16
Sep-16
Sep-16
Dec-16
Dec-16
Mar-17
Mar-17
Jun-17
Jun-17
Sep-17
Sep-17
Luraktay huay variables:

Seasonal effect specially in chicken

Imports india tomato

Sugar search negative values